Should Driskill's Be A Co-op?

would work better as a natural foods co-op.

That’s the conclusion of a study that examined what’s needed to help the struggling grocery store remain in the downtown.

The study—paid for with a Hennepin County grant—arose out of talks between owner Scott Driskill and the city over the past year. Driskill says the store can’t compete in today’s market because of its location and size. The grocery store’s lease expires in 2013, and Driskill must notify the landlord by July 1 whether he’ll stay.

Hopkins officials are interested in a downtown grocery store because of its effect on the rest of the downtown—an area that’s a major part of the city’s redevelopment efforts and self-image.

“A grocery store is not viewed as any old business in the downtown,” said Kersten Elverum, the city’s director of economic development and planning. “It really is an anchor. It brings thousands of visitors in a week, and that has a ripple effect.”

But the location isn’t a good one for Driskill’s. The rerouting of Excelsior Boulevard two blocks to the south left the store hidden from the heaviest traffic, and Driskill’s has limited visibility from Mainstreet.

Its small size compared to stores like Cub Foods also prevents the store from realizing cost efficiencies. Driskill’s has weekly sales of $5.45 per square foot—the lowest of the 28 stores in an area that has average weekly sales of $11.72 per square foot, according to the study.

While small neighborhood grocery stores like Driskill’s once dominated the Twin Cities landscape, they’ve all-but disappeared in the face of Super Target, Cub and other large stores.

“With the format right now, there’s not a real long-term viability in downtown Hopkins,” said Terry O'Connell—an analyst with Dakota Worldwide Corp., the company that did the study. “I don’t know if it’s going to be this year or somewhere down the road, (but) Scott will have to make a decision about what to do in Hopkins.”

Transforming into a smaller, specialty store could be one way to become more viable. Stores such as Aldi’s, Trader Joe’s and natural foods co-ops have greater brand loyalty and attract customers from a larger area.

A co-op at the Driskill’s location wouldn’t compete as much against the Super Target or Cub just a few miles away as it would against other co-ops—such as Lakewinds six miles away and Linden Hills Co-op five miles away, O'Connell said.

The report estimated that Driskill’s could grow its weekly sales from $135,000 to $300,000 by 2015 if it became a co-op like Linden Hills.

By contrast, the report’s models estimate that changing Driskill’s to an upscale format like Fresh Seasons would increase weekly sales to $190,000 over the same period.

Council members were skeptical, though. The so-called trade area is wealthy. But the area within one mile of Driskill’s—which accounts for about half the store’s customers—has a median income less than three-quarters the rest of the area. Councilwoman Cheryl Youakim questioned whether families on tight budgets would be willing to spend more on natural foods.

“Wouldn’t you lose as many local customers as you gain farther away?” she asked.

The council also wants to ensure a downtown store supports residents who walk to get their groceries and is compatible with the future light rail line.

“Our main goal probably should be to make sure Driskill’s does remain downtown,” Mayor Gene Maxwell said. “I want to make sure we try to maintain the small-business attitude we have.”

Elverum said the intent is not to force out Driskill’s and replace it with a co-op. The study simply allows Hopkins to prepare for what might happen—while giving the city a tool to shop the site around to new operators if Driskill’s goes.

Ultimately, the decision on what will happen is up to Driskill. He noted that the study is a survey, not a foolproof plan, and that he hadn’t verified the data that led to its conclusions. But he said it seemed grounded in reality.

“There were no surprises in there,” Driskill said.